Rising stakes: enhanced vigilance by the Hungarian Competition Authority

The Hungarian Competition Authority (“GVH”) in the last couple of months has taken regulatory measures in various product markets explored in our latest articles regarding its HoReCa sector inquiry, investigation in the food sector and price monitoring database. To this end, the GVH is not only consulting with market players, but also making recommendations and acting with increased urgency to strengthen competition. Therefore, keeping up with the latest actions of the GVH may also be of importance for market players.

Developments in the dairy market

As we reported in our last article, the GVH conducted a sector inquiry and issued a draft report on its observations and recommendations on the dairy market.

In its draft report, the GVH supports the development and operation of an online price monitoring system and the promotion of sustainable packaging. The authority also sets out recommendations on plant-based drinks and highlights the importance of enhanced regulatory action. 

In cooperation with the Ministry of Agriculture and the Milk Interprofessional Organisation and Product Board, the GVH is currently conducting a review of the price formula for raw milk base price.

Increased focus on the non-perishable food market

The GVH also conducted a sector inquiry into the non-perishable food market and recently published a draft report on its findings. The draft report is out for public consultation, and market players are invited to comment until 8 June 2023.

In accordance with the findings of the GVH, the non-perishable food market is particularly heterogeneous in terms of products. With regard to the producers, the pricing mechanisms are different than for fresh food, while the key importance for consumers lies in the popularity and good storability of non-perishable food.

In its recommendations, the GVH:

1. emphasises the incentivisation of domestic fruit and vegetable production and the development of modern and sustainable irrigation systems;
2. further encourages trade associations to assist and represent their members in negotiations with processors;
   
3. includes long-term proposals for increasing efficiency in agricultural production and education. The authority encourages automatisation in view of the manpower shortage in the sector;
4. proposes the use of returnable glass packaging, citing the high cost and increasing price of packaging materials.

The GVH considers the retail level as a particularly important component of the supply chain, as it can generate pressure on the downstream markets through procurement, while increased competition would contribute significantly to consumer price consolidation.

Therefore, the GVH is monitoring the market intensively, which calls for an increased level of caution on the part of market players. As above, it is expected that the GVH will act with enhanced intensity and rigour against potentially anti-competitive conduct.

Summary

Considering the GVH's commitment to tackling consumer price increases, market players are advised to be particularly prudent in their cooperation with their counterparties and in their commercial practices, as well as to pay closer attention to the GVH's sector-specific recommendations.

For more information, please contact, Gábor Kutai, Marcell Fekete or Dániel Arányi.

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